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The new year is a time for goals and resolutions. If one of your goals in 2008 is to take control of your money (instead of letting it keep control of you), this crash course in financial basics can help guide the way. Here’s a summary of everything I’ve learned about personal finance.

[This is] the best way to become conscious of how money actually comes and goes in your life as opposed to how you think it comes and goes…This is the step that somehow makes the biggest impact.

It doesn’t matter how you track your spending — the most important thing is to do it. You can use a cash notebook, you can use an on-line tool like Wesabe, or you can use a piece of software like Quicken or Microsoft Money.

Whichever method you choose, stick with it. Make it a habit. Don’t fudge the numbers. Record your transactions as soon as possible. Most of all, don’t judge yourself. Tracking your spending is an exercise in data collection; it’s not the appropriate time to change your habits.

Develop a budget
After you’ve tracked your spending for a few weeks (or months), use the data you’ve collected to develop a budget. According to The Millionaire Next Door, budgeting is one thing that sets the wealthy apart from the rest of us — 55% of millionaires keep a budget.

Many people — including myself — fail to budget for a variety of reasons: it’s boring, we don’t think we need it, we don’t know how. But this simple act provides a roadmap for your money. There are a variety of budgeting methods you can choose, from Andrew Tobias’ three-step budget to the 60% budget. Last October, I wrote about the spending plan, a budgeting method for non-budgeters.

Start an emergency fund
For years I lived paycheck-to-paycheck. I spent everything I earned. This worked well until something went wrong. And something always went wrong. Suddenly I’d find myself without money to pay for a car repair, or facing an expensive doctor’s bill. I financed emergencies with credit cards. After years of carrying debt, I finally paid off all these emergencies last month.

Since I hate debt so much, people often ask why we don’t start with the debt. I used to do that when I first started teaching and counseling, but I discovered that people would stop their whole Total Money Makeover because of an emergency — they felt guilty that they had to stop debt-reducing to survive.

After you’ve saved $1000, then you can attack your debt. Open an online high-yield savings account and add $20 or $50 to your account ever time you get paid. Last summer, I opened an account at ING Direct, where it’s simple to schedule automatic deposits.

Get out of debt
Are you struggling under a heavy debt load from credit cards or student loans? Make it a priority to unload some of this this burden in 2008. Last month I said good-bye to 20 years of debt — it feels fantastic to have that weight off my shoulders.

If you have the mental discipline, you’ll save money by paying down your high-interest debt first. But if you’ve tried that method before and failed, consider using a debt snowball. Pay your debts starting with the smallest balance first. Here’s how:

Order your debts from lowest balance to highest balance.

Designate a certain amount of money to pay toward debts each month.

Pay the minimum payment on all debts except the one with the lowest balance.

Throw every other penny at the debt with the lowest balance.

When that debt is gone, do not alter the monthly amount used to pay debts, but throw all you can at the debt with the next-lowest balance.

The debt snowball can give you awesome psychological payoffs, keeping you motivated to stay in the game. It’s not mathematically ideal, but it worked for me (and for many others besides).

The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.

After reading The Automatic Millionaire a couple years ago, I opened a Roth IRA at Sharebuilder. It was easier than opening a checking account. I managed to make the maximum contribution in 2006, and tomorrow I’ll complete funding for 2007. Don’t understand retirement accounts? No problem. Last June I explained what a Roth IRA is and why you should care.

Spend less than you earn
This is the fundamental money skill. It’s common sense, yet many people never learn do it. Only by spending less than you earn can you hope to build wealth. This is easier to do if you track your spending or develop a budget, but those steps aren’t completely necessary. Even if you do nothing else in this list, spending less than you earn can put you ahead of your peers.

Automate your finances
My current project is to move toward a system of paperless personal finance. Along the way, I’m learning the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.

The classic example is overdraft protection. By tying your checking account to your savings account, you have a safety net if you bounce a check. But there are other ways this can work for you. For example, I’ve set up automatic payments with the gas company, the cable company, and my auto insurance company. I also make automatic investments to my retirement account.

Educate yourself
Knowledge is power. Personal finance doesn’t have to be a mystery. Subscribe to this site. Visit other personal finance blogs. I recommend:

* The Simple Dollar
* I Will Teach You to Be Rich
* The members of the Money Blog Network
* The members of the LifeRemix Network

Last spring, I shared a vast collection of online financial literacy resources, including video tutorials, web-based courses, and much more. This is a great place to begin learning about the basics of saving and investing.

You don’t have to agree with everything in a book to get something out of it. I read a lot of personal finance books — some are good, but many are not. Even the worst books usually have one or two things I can pull from them. Learn how to read a personal finance book so that you can pick and choose those pieces appropriate for your life. And remember to use your public library!

Final words Taking control of your finances can be intimidating — there’s so much to do! — but it doesn’t have to be that way. One effective solution is to take a vacation day from work: designate one specific date as your personal “Money Day”. Use this day to finally set up Quicken on your computer, to open a retirement account, and to call around for a better deal on your insurance.

Two final notes:

Do what works for you. There are few hard-and-fast rules in the world of personal finance. I can suggest methods that have worked for me (and for others), but only you can determine if these methods are appropriate for your own circumstances.